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Last updated: 1st August 2023

Stewardship Code and Shareholder Rights Directive Disclosure

1.  Stewardship Code

This statement outlines the Firm’s position with respect to the UK Stewardship Code (the “Code”), which was published by the Financial Reporting Council (“FRC”) in July 2010 and amended in 2012 and 2020.  Under Rule 2.2.3R of the FCA’s Conduct of Business Sourcebook, the Firm is required to make a public disclosure about the nature of its commitment and level of compliance to the Code or, where it does not commit to the Code, to explain its alternative investment strategy.

The Code is a voluntary code, which aims to enhance the quality of engagement between asset owners/asset managers and listed companies in the UK, to help improve long-term risk-adjusted returns to shareholders and the efficient exercise of governance responsibilities. It sets out good practice on engagement with investee companies and is to be applied by firms on a “apply and explain” basis. It also describes steps that asset owners can take to protect and enhance the value that accrues to the ultimate beneficiary.

The FRC recognises that capital is invested in a range of asset classes over which investors have different terms and investment periods, rights and levels of influence. Hence the Code does not solely apply to equity investments.

The FRC also recognises that not all parts of the Code will be relevant to all institutional investors and that smaller institutions may judge some of the principles and guidance to be disproportionate. It is of course legitimate for some asset managers not to engage with companies, depending on their investment strategy.

The Code comprises twelve Principles that can be summarised as follows:

Purpose and governance
  1. Purpose, strategy and governance
  2. Governance, resources and incentives
  3. Conflicts of interest
  4. Promoting well-functioning markets
  5. Review and assurance

Investment approach
  1. Client and beneficiary needs
  2. Stewardship, investment and ESG integration
  3. Monitoring managers and service providers

Engagement
  1. Engagement
  2. Collaboration
  3. Escalation

Rights and Responsibilities
  1. Exercising rights and responsibilities

2.  The Firm’s Position

The Firm’s approach in relation to engagement with issuers and their management, is determined on a global basis.  A consistent global approach is taken to engagement with issuers and their management in all of the jurisdictions in which the Firm invests and, consequently, the Firm does not consider it appropriate to commit to any particular voluntary code of practice relating to any individual jurisdiction and feels that the Code and SRD are not appropriate to the Firm’s business model.  The Firm does not invest in listed equities as a core strategy. It may invest in listed equities from time-to-time however this is not considered to be an integral component of the investment strategy.

Whilst the Firm has not made a formal commitment of compliance with the Code or the SRD, its alternative investment strategy, is generally supportive of the spirit and aims of good stewardship as contained within the Code and SRD.  As such, in practice, the Firm would take into consideration the principles as set out in the Code and SRD.

This Statement is reviewed annually and updated where necessary to reflect changes in circumstances and actual practice.  Should the Firm’s position change we will review our commitment to the Code and SRD and make appropriate disclosure at that time.

For further details on any of the above information please contact the Firm’s Compliance Officer.

 

3.  Shareholder Rights Directive

The Second Shareholder Rights Directive (“SRD”), which took effect in the UK on 10 June 2019, aims to improve shareholder engagement and increase transparency around stewardship. The Firm invests in listed equities and as such we are required to disclose and make publicly available our policies on how we engage with other shareholders and the companies that we invest in, and how our strategies create long-term value.

The UK Stewardship Code (the “Code”) was established by the Financial Reporting Council in 2010. UK authorised asset managers have been required under the rules of the Financial Conduct Authority to produce a statement of commitment to the Code or to explain why it is not appropriate to its business model.

Unlike SRD, which applies to investments in listed equities globally, the Code focuses on investments in UK companies only.

We are required to either:

  • publicly disclose an Engagement Policy and a public statement on an annual basis on how the Engagement Policy has been implemented; or
  • publicly disclose a clear and reasoned explanation of why the Firm has chosen not to make these disclosures.

The Firm has elected to not publicly disclose its Engagement Policy. This is for the following reasons:

The Firm does not invest in listed equities as a core strategy. It may invest in listed equities from time-to-time however this is not considered to be an integral component of the investment strategy.

This Statement is reviewed annually and updated where necessary to reflect changes in circumstances and actual practice. Should the Firm’s position change we will review our commitment to SRD and make appropriate disclosure at that time.